BOCOM Int'l Research

Morning Express 31 July 2020

Focus of the Day

TAL Education TAL US Kindly vote for BOCOM Int’l Rating: Buy sales & research teams in the 1QFY21 beat; online contributed 1/4 of revenue 2020 Asiamoney Brokers Poll at: CP: US$ 78.00 Upside: +15.4% TP: US$ 90.00↑ https://euromoney.com/brokers Connie Gu, CPA [email protected] Click here for our team profile. 1QFY21 beat. Net revenue was US$911m, up 35% YoY, beating our estimate/ consensus by ~3%. Non-GAAP EPS was US$0.18, vs. our estimate/consensus of Global Stock Indices US$0.02/0.068, on less-than-expected marketing spending and lower admin Close 1D% YTD% expenses, as well as VAT exemption. HSI 24,711 -0.69 -12.34 HSCEI 10,097 -0.86 -9.59 Key highlights: (1) Peiyou core revenue grew 22% YoY in USD terms (+18%/+27% SH A 3,445 -0.24 7.79 in top 5 cities/other cities). (2) TAL net added 65 learning centers and entered 10 SH B 238 0.00 -7.49 new cities in 1QFY21. (3) Online revenue grew 123% YoY in USD terms, while SZ A 2,331 -0.43 29.35 SZ B 921 0.18 -4.21 normal-priced enrolments rose 143% YoY, contributing 25%/43% of total. ASP fell DJIA 26,314 -0.85 -7.80 13% YoY due to mix change. S&P 500 3,246 -0.38 0.48 Nasdaq 10,588 0.43 18.00 2QFY21E outlook: We expect revenue to grow 21% YoY to US$1103m, with FTSE 5,990 -2.31 -20.58 100%+/7% growth of online/Peiyou, the lower growth of Peiyou mainly due to CAC 4,853 -2.13 -18.82 course rescheduling to 1Q. We estimate non-GAAP OPM to drop ~8ppts to 1%, DAX 12,380 -3.45 -6.56 worse than -3.7ppts in 1QFY21. Source: FactSet Key Commodity/Forex Indicators Valuation: We assume pandemic impact will ease in 2HFY21, and expect TAL Close 3M% YTD% revenue to grow 35% in FY21. We think TAL has a bright LT growth outlook to Brent 43.76 73.17 -33.74 gain market share. Maintain Buy and lift TP from US$85 to US$90, implying Gold 1,953.50 15.99 28.56 125x/81x CY20E/21E P/E. Silver 24.34 58.69 34.86 Copper 6,475.00 23.78 5.18 JPY 105.03 1.82 3.48 GBP 1.30 3.39 -1.56 China Everbright Greentech 1257 HK EUR 1.18 7.68 5.07 Expect better project operation in 2H20 Rating: Buy bps change 3M 6M CP: HK$ 3.41 TP: HK$ 4.17↓ Upside: +22.3% HIBOR 0.45 -72.82 -80.66 Wallace Cheng [email protected] US 10yr yield 0.55 -11.43 -64.62 Source: FactSet Biomass projects on hand to complete construction by end-2020E. For its biomass segment, CEG commenced operation for four projects in 1H20. By end- HSI Technical 2020E, CEG will have all its biomass power projects completed, with 983MW in HSI 24,710.59 50D MA 25,010.24 capacity. 200D MA 25,138.59 14D RSI 47.79 Weak operation expected for HWT segment in 1H20. We expect hazardous Short sell (HK$m) 17,464 waste treatment (HWT) segment to have weaker operational results in 1H20, Source: FactSet with both processing fee and volume hit. Hao Hong, CFA Expect 1H20 earnings to stay flattish YoY. We expect CEG’s 1H20 profit to stay Head of Research flat YoY at HK$823m in 1H20, mainly supported by the biomass segment. [email protected]

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Awaiting breakthrough in subsidy collection and segmental transition. We lower our valuation benchmark from 12.5x to 10.0x forward P/E, solely based on operation profit, and revise down our TP to HK$4.17 (from HK$5.62). Maintain Buy.

Healthcare Sector PTQ update: 3rd round rules unchanged, impact likely limited Aiwei Li, PhD [email protected] The Joint Procurement Office has included 56 products in the third-round national PTQ with the pricing rules, volume allocation, and procurement cycle unchanged, while increasing the maximum number of bid-winning companies allowed to 8. Final results are due on 20 August. In our view, the consistency of rules should accustom pharmaceutical companies to PTQ as a new normal, and make policy impact more visible.

Among our covered companies, Sino Biopharm (SBP), CSPC, Shanghai Pharma, Baiyunshan, HEC Pharma, and Sinopharm have products enlisted in this round. As these products kick in minimal revenue for now, price cut impact should be mild. Instead, bid winners should enjoy rapid volume ramp-up and market share gains.

We believe the clouds over PTQ have gradually cleared up, after which investors will turn their eyes to innovative drug assets. Rising sector consolidation augurs well for the generic drug business of pharmaceutical leaders with strong R&D and production capabilities. Maintain Outperform sector rating, and top Buy ratings for SBP (1177 HK) and Livzon (1513 HK).

Property Sector Weekly

As of 30 July 2020 Philip Tse, CFA, FRM [email protected] Hong Kong property: Vanke and CNQC won the residential land plot at a Tai Po site for HK$3.7bn. 135 transactions were seen last weekend in primary market with new launches as scheduled.

China property: Local governments including Nanjing and Dongguan moved to tighten property regulation to cool down the market. 10-city MTD transaction volume rose 13.8% YoY.

Investment implications: For HK property, despite another round of community outbreak of COVID-19, we maintain our view that lower HIBOR and structural supply shortage will continue to support the property market in the long term. We still prefer developers with ample residential pipelines rather than

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retail/commercial portfolios, including SHKP (16 HK/Buy) and New World (17 HK/Buy).

For China property, several cities with accelerated ASP growth have announced diverse policies since early Jul to curb speculation but favor non-home-owning households. We continue to favor developers with higher margins, healthy financials, and potential spin-off in 2H20E, including Shimao (813 HK/Buy).

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Economic data releases for this week – US Economic data releases for this week – China Date Event Survey Prior Date Event Survey Prior 27 Jul Core Durable Goods Orders (MoM) 3.5% 3.7% 30 Jul Manufacturing PMI 51.0 50.9 30 Jul GDP (QoQ) -34.0% -5.0% 30 Jul Initial Jobless Claims (k) 1,400 1,416 Source: Bloomberg Source: Bloomberg

BOCOM Research latest reports 30 Jul Healthcare Sector - Third round PTQ rules unchanged, with limited potential impact Aiwei Li, PhD, Li Zhao, PhD, Kent Lin, Mengmeng Xi 30 Jul Renewable Energy Sector Weekly - As of 29 July 2020 Louis Sun, Bob Wen, CPA 30 Jul WuXi Biologics (2269 HK) - 1H20 positive profit alert: solid beat with strong growth visibility Aiwei Li, PhD, Li Zhao, PhD, Mengmeng Xi, Kent Lin 29 Jul Frontier Research - A dive into the impact of central bank digital currency Hao Hong, CFA, Connie Gu, CPA, Li Wan, CFA, FRM, Hannah Han, Hanna Cai , Karen Tan 29 Jul Huadian Power Int'l (1071 HK) - Softened power sales growth a ST snag, but LT outlook intact Spencer Luo, Wallace Cheng 29 Jul ASM Pacific (522 HK) - Solid 2Q20 but visibility limited; positive longer-term outlook intact Chris Yim 29 Jul Healthcare Sector Weekly - As of 28 July 2020 Li Zhao, PhD, Aiwei Li, PhD, Kent Lin, Mengmeng Xi 29 Jul WuXi Biologics (2269 HK) - 1H20 positive profit alert: solid beat with strong growth visibility Aiwei Li, PhD, Li Zhao, PhD, Mengmeng Xi, Kent Lin 29 Jul JD.com Inc (JD US) - Expecting 1P growth to be higher than industry, with accelerated customer Brandy Sun, Connie Gu, CPA, Gigi Zhou, Li Zhao, CFA acquisition in lower-tier cities 29 Jul New Oriental Education (EDU US) - 4QFY20 results in line; domestic business recovering Connie Gu, CPA, Brandy Sun, Gigi Zhou, Li Zhao, CFA 29 Jul HEC Pharm (1558 HK) - Portfolio still lacks variety; downgrade to Neutral Li Zhao, PhD, Aiwei Li, PhD, Kent Lin, Mengmeng Xi 28 Jul Internet Sector - Tencent’s Sogou buyout offer to benefit all three parties Connie Gu, CPA, Brandy Sun, Gigi Zhou, Li Zhao, CFA 28 Jul Transportation & Infrastructure Sector Weekly - As of 24 July 2020 Fay Zhou, Luya You, Maggie Wang 28 Jul Link REIT (823 HK) - First London office foray DPU-accretive in longer term Philip Tse, CFA, FRM, Evangeline Luo 27 Jul Renewable Energy Sector Insights - PV glass fundamentals look up sector-wide; leaders set to Bob Wen, CPA, Louis Sun soar 27 Jul Internet Sector Weekly - As of 24 July 2020 Connie Gu, CPA, Brandy Sun, Gigi Zhou, Li Zhao, CFA 27 Jul Fintech Sector - Lowering civil usury rate cap may hurt private lending market Hannah Han, Jaclyn Wang 27 Jul China Macro Review - Data monitor: PBoC’s primary concern on stability unchanged Hanna Cai, Karen Tan 27 Jul Internet Sector Monthly - Video monthly data tracking (Jun 2020) Connie Gu, CPA, Gigi Zhou, Brandy Sun, Li Zhao, CFA 10 Jun BOCOM Int’l Research - Outlook 2H20: The Dragon Awaits BOCOM Int’l Research Link: http://researchreport.bocomgroup.com/Outlook_200610e.pdf Source: BOCOM Int'l

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HSI constituents Company Stock Current Mkt 5D YTD ------52-week------P/E------Yield P/B name code price cap chg chg High Low 2019 2020E 2021E 2020E 2020E (HK$) (HK$ m) (%) (%) (HK$) (HK$) (x) (x) (x) (%) (x) CKH 1 HK 50.55 194,933 1.51 -31.97 75.45 45.55 4.84 5.88 N/A 5.73 0.39 CLP 2 HK 72.45 183,041 1.33 -11.54 85.25 65.00 39.10 15.71 15.21 4.30 1.65 HK & CHINA GAS 3 HK 11.10 197,262 0.54 -23.42 16.51 10.86 27.68 27.15 25.16 3.22 2.95 HSBC 5 HK 35.65 726,050 -0.97 -41.41 63.35 34.80 6.47 16.47 9.45 1.08 0.55 POWER ASSETS 6 HK 42.70 91,133 0.83 -25.09 58.50 41.85 12.77 14.06 13.42 6.57 1.06 HANG SENG 11 HK 123.90 236,877 -0.32 -23.04 186.90 117.90 9.70 12.45 12.30 5.25 1.33 HENDERSON 12 HK 29.00 140,400 1.40 -24.18 40.75 26.95 9.59 9.15 10.79 6.22 0.44 SHKP 16 HK 93.90 272,102 1.57 -21.29 126.90 89.00 8.27 9.12 8.33 5.35 0.46 NEW WORLD 17 HK 37.65 95,974 1.07 -11.87 46.88 30.44 10.64 11.49 10.02 5.57 0.41 SWIRE PACIFIC 19 HK 38.50 34,851 1.05 -46.82 89.70 38.10 8.04 N/A 9.32 7.77 0.22 GEG 27 HK 51.90 225,023 3.70 -9.58 62.45 38.60 17.20 N/A N/A 0.12 3.17 MTRC 66 HK 38.40 237,241 0.26 -16.61 51.55 36.85 22.06 36.49 24.02 3.24 1.28 SINO 83 HK 9.29 65,450 -0.54 -17.93 12.76 8.18 13.43 14.05 N/A 6.04 0.43 HLP 101 HK 19.26 86,626 1.26 12.63 21.60 13.82 19.37 19.88 N/A 3.96 0.62 WANT WANT 151 HK 5.81 72,132 0.35 -20.19 7.37 4.93 18.57 N/A N/A N/A N/A GEELY 175 HK 16.26 159,561 2.39 6.69 19.06 10.08 16.66 17.03 13.48 1.44 2.22 CITIC LTD 267 HK 7.29 212,068 -0.14 -30.04 10.70 6.95 4.01 4.38 3.90 5.67 0.34 WH GROUP 288 HK 6.90 101,634 1.62 -14.29 8.78 5.96 9.43 8.75 8.44 4.64 1.36 SINOPEC 386 HK 3.40 86,746 -1.45 -27.51 5.06 3.20 6.49 25.98 9.75 4.21 0.50 HKEX 388 HK 362.60 459,719 0.61 43.32 380.00 211.40 49.05 44.90 39.09 2.04 9.87 COLI 688 HK 23.35 255,817 -1.06 -23.06 30.70 22.00 5.56 5.87 5.09 4.95 0.75 TENCENT 700 HK 535.00 5,112,016 1.33 42.44 564.00 316.20 50.72 40.79 33.88 0.24 8.43 UNICOM 762 HK 4.27 130,654 -1.39 -41.83 8.68 3.90 10.55 9.55 8.48 4.10 0.36 LINK 823 HK 60.30 124,091 2.38 -26.91 94.30 57.00 21.85 20.63 20.40 4.84 0.76 CR POWER 836 HK 9.71 46,709 0.83 -11.24 11.52 6.58 7.02 4.99 4.60 7.75 0.59 PETROCHINA 857 HK 2.69 56,756 -5.94 -31.20 4.32 2.23 9.83 852.24 22.92 1.95 0.37 CNOOC 883 HK 8.44 376,825 -0.94 -34.88 13.74 6.40 5.62 21.08 10.33 3.63 0.76 CCB 939 HK 5.77 1,452,213 -1.54 -14.26 6.80 5.64 5.11 4.87 4.67 6.21 0.58 CHINA MOBILE 941 HK 53.10 1,087,248 -0.75 -18.93 69.70 48.25 9.32 9.18 8.89 6.07 0.86 CK INFRA 1038 HK 40.05 106,160 4.57 -27.77 60.85 35.65 9.40 11.80 10.32 6.34 0.86 HENGAN 1044 HK 65.60 78,044 -2.02 18.20 69.15 49.20 18.27 15.92 N/A 4.31 3.66 SHENHUA 1088 HK 12.88 43,774 -1.83 -20.88 17.00 12.06 5.64 6.14 6.11 8.54 0.64 CSPC 1093 HK 16.06 120,187 4.69 3.72 17.83 9.95 27.76 23.33 19.72 1.23 4.74 CR LAND 1109 HK 32.30 230,329 -2.56 -16.75 39.40 28.00 9.47 8.55 7.41 4.07 1.08 CKA 1113 HK 42.70 157,708 -1.39 -24.09 59.35 34.40 5.49 7.13 N/A 4.92 0.43 SBP 1177 HK 10.16 191,746 2.21 39.82 10.88 5.98 54.20 52.06 42.30 0.47 5.04 AIA 1299 HK 70.85 856,653 -1.46 -13.39 87.35 60.70 16.97 22.87 15.48 1.85 1.86 ICBC 1398 HK 4.65 1,890,149 -0.64 -22.50 6.05 4.65 4.94 4.77 4.56 6.36 0.56 SANDS 1928 HK 29.70 240,245 1.54 -28.69 45.00 26.15 15.02 N/A N/A 3.36 11.68 WHARF REIC 1997 HK 28.00 85,014 0.00 -41.11 49.70 28.00 8.70 10.41 10.56 6.07 0.39 COUNTRY GARDEN 2007 HK 9.89 216,325 0.00 -20.75 12.88 7.88 5.04 4.30 3.94 7.02 1.06 AAC TECH 2018 HK 59.55 71,966 3.66 -12.43 70.00 33.55 28.81 30.04 22.12 1.17 3.06 SHENZHOU 2313 HK 93.15 140,025 2.36 -18.22 117.30 73.15 25.15 27.10 22.15 1.84 4.68 PING AN 2318 HK 82.65 1,527,413 -0.90 -10.26 99.55 70.90 8.96 9.65 8.09 3.02 1.77 MENGNIU 2319 HK 36.95 145,531 6.64 17.30 37.15 25.00 31.99 41.48 26.32 0.55 4.16 SUNNY OPTICAL 2382 HK 144.50 158,495 4.63 7.12 147.40 80.70 35.97 31.49 23.90 0.66 8.86 BOCHK 2388 HK 21.80 230,487 -0.46 -19.41 30.10 20.40 7.18 8.36 7.97 6.28 0.79 CHINA LIFE 2628 HK 17.90 966,408 -0.56 -17.32 22.75 12.86 8.10 9.77 8.74 3.61 1.07 BOCOM 3328 HK 4.33 151,601 -0.46 -21.84 5.74 4.29 3.95 3.82 3.69 8.11 0.39 BOC 3988 HK 2.62 998,487 -0.76 -21.32 3.37 2.62 3.94 3.81 3.72 7.96 0.40

HANG SENG INDEX 24,710.59 18,620,543 0.02 -12.34 29,056.42 21,696.13 21.18 21.95 16.46 3.54 3.22 Source: FactSet

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HSCEI constituents Company Stock Closing Mkt 5D YTD ------52-week------P/E------Yield P/B name code price cap chg chg High Low 2019 2020E 2021E 2020E 2020E (HK$) (HK$ m) (%) (%) (HK$) (HK$) (x) (x) (x) (%) (x) CITIC LTD 267 HK 7.29 212,068 -0.14 -30.04 10.70 6.95 4.01 4.38 3.90 5.67 0.34 GDI 270 HK 12.78 83,553 -1.99 -21.60 17.30 12.22 16.56 16.70 14.20 4.69 1.97 CGH 384 HK 23.25 121,332 -0.64 -20.38 34.75 22.85 14.54 13.47 11.53 2.11 3.12 SINOPEC 386 HK 3.40 86,746 -1.45 -27.51 5.06 3.20 6.49 25.98 9.75 4.21 0.50 CRG 390 HK 3.94 141,706 -2.96 -18.09 5.52 3.47 3.74 3.62 3.29 4.72 0.36 DONGFENG 489 HK 5.66 16,163 11.64 -22.78 8.47 4.42 3.34 4.02 3.46 4.96 0.31 TENCENT 700 HK 535.00 5,112,016 1.33 42.44 564.00 316.20 50.72 40.79 33.88 0.24 8.43 CHINA TELECOM 728 HK 2.29 31,779 0.00 -28.66 3.76 2.06 8.31 8.17 7.69 5.39 0.46 AIR CHINA 753 HK 4.85 97,572 2.75 -38.69 8.26 4.60 9.39 N/A 7.08 0.00 0.73 CHINA TOWER 788 HK 1.74 81,195 0.00 1.16 2.04 1.56 42.94 31.99 23.71 1.56 1.20 PETROCHINA 857 HK 2.69 56,756 -5.94 -31.20 4.32 2.23 9.83 852.24 22.92 1.95 0.37 CNOOC 883 HK 8.44 376,825 -0.94 -34.88 13.74 6.40 5.62 21.08 10.33 3.63 0.76 HUANENG 902 HK 3.30 72,862 -1.20 -16.24 4.73 2.24 296.25 7.80 6.89 8.44 0.44 CONCH 914 HK 59.30 77,066 3.85 4.40 61.00 42.55 8.59 8.04 8.02 3.96 1.73 CCB 939 HK 5.77 1,452,213 -1.54 -14.26 6.80 5.64 5.11 4.87 4.67 6.21 0.58 CHINA MOBILE 941 HK 53.10 1,087,248 -0.75 -18.93 69.70 48.25 9.32 9.18 8.89 6.07 0.86 CNCB 998 HK 3.39 244,993 0.00 -27.41 4.77 3.33 3.46 3.04 2.84 8.25 0.31 HENGAN 1044 HK 65.60 78,044 -2.02 18.20 69.15 49.20 18.27 15.92 N/A 4.31 3.66 SHENHUA 1088 HK 12.88 43,774 -1.83 -20.88 17.00 12.06 5.64 6.14 6.11 8.54 0.64 CSPC 1093 HK 16.06 120,187 4.69 3.72 17.83 9.95 27.76 23.33 19.72 1.23 4.74 SINOPHARM 1099 HK 18.56 24,904 -0.43 -34.76 29.45 14.86 8.00 7.46 6.66 3.94 0.94 CR LAND 1109 HK 32.30 230,329 -2.56 -16.75 39.40 28.00 9.47 8.55 7.41 4.07 1.08 BYD 1211 HK 73.55 67,298 1.52 89.32 89.80 33.55 136.11 79.07 N/A 0.15 3.16 ABC 1288 HK 2.77 1,226,810 -0.36 -19.24 3.47 2.74 4.30 4.11 3.97 7.49 0.46 NCI 1336 HK 30.20 152,587 -2.42 -9.85 39.30 20.65 5.93 6.75 5.85 4.19 0.91 PICC 1339 HK 2.52 21,990 1.61 -22.22 3.38 2.11 4.61 5.25 N/A 4.58 0.51 CINDA 1359 HK 1.45 19,673 -2.03 -18.08 1.86 1.36 4.31 3.61 3.34 8.23 0.34 ICBC 1398 HK 4.65 1,890,149 -0.64 -22.50 6.05 4.65 4.94 4.77 4.56 6.36 0.56 PSBC 1658 HK 4.33 85,977 -1.81 -18.30 5.39 4.26 5.62 5.32 4.88 5.68 0.64 CRRC 1766 HK 3.41 172,475 -0.58 -39.96 6.19 3.16 7.51 7.08 6.49 4.94 0.62 GF SEC 1776 HK 9.25 15,742 2.10 -2.53 10.76 7.49 8.44 7.70 7.14 4.58 0.66 CCC 1800 HK 4.50 122,932 1.58 -29.13 6.70 4.35 3.46 3.19 2.87 6.14 0.27 CGN POWER 1816 HK 1.63 150,590 0.00 -21.63 2.27 1.52 7.37 7.80 7.41 5.40 0.78 MSB 1988 HK 4.93 258,533 0.20 -16.30 5.99 4.92 3.74 3.63 3.41 8.52 0.41 VANKE 2202 HK 24.65 46,676 -1.79 -25.86 34.35 23.20 6.46 5.84 5.11 5.15 1.16 GAC 2238 HK 7.28 108,558 16.67 -24.95 9.97 5.59 9.88 9.40 7.14 3.48 0.76 SHENZHOU 2313 HK 93.15 140,025 2.36 -18.22 117.30 73.15 25.15 27.10 22.15 1.84 4.68 PING AN 2318 HK 82.65 1,527,413 -0.90 -10.26 99.55 70.90 8.96 9.65 8.09 3.02 1.77 PICC P&C 2328 HK 6.16 42,500 0.49 -34.40 10.16 6.13 5.19 5.79 5.32 7.21 0.69 GWM 2333 HK 7.78 112,207 -4.66 35.07 8.16 3.85 14.95 15.59 12.33 3.14 1.18 CPIC 2601 HK 22.45 285,647 -0.88 -26.87 34.30 18.16 6.80 7.49 6.83 6.15 0.96 CHINA LIFE 2628 HK 17.90 966,408 -0.56 -17.32 22.75 12.86 8.10 9.77 8.74 3.61 1.07 HUARONG 2799 HK 0.90 22,539 -3.23 -26.83 1.34 0.77 20.55 16.44 11.74 2.43 0.26 BOCOM 3328 HK 4.33 151,601 -0.46 -21.84 5.74 4.29 3.95 3.82 3.69 8.11 0.39 CMB 3968 HK 36.30 955,988 -1.36 -9.36 42.00 31.45 9.27 8.27 7.40 3.94 1.30 BOC 3988 HK 2.62 998,487 -0.76 -21.32 3.37 2.62 3.94 3.81 3.72 7.96 0.40 CITIC SEC 6030 HK 18.18 389,921 2.83 2.25 20.75 13.00 16.63 13.80 12.02 3.31 1.19 ZA ONLINE 6060 HK 47.00 22,081 11.11 67.26 55.10 16.76 N/A 280.31 95.43 0.00 3.93 HAITONG SEC 6837 HK 7.22 150,048 2.27 -21.61 9.43 5.86 7.97 7.60 6.68 3.96 0.56 HTSC 6886 HK 13.90 191,948 1.46 0.87 16.04 10.40 12.44 10.96 9.87 3.17 0.89

HANG SENG CHINA ENT INDX 10,097.08 18,215,964 0.16 -9.59 11,419.91 8,559.64 20.03 19.23 13.87 4.00 2.85 Source: FactSet

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Rating System Analyst Stock Rating: Analyst Industry Views: Buy: The stock's total return is expected to exceed that of the Outperform: The analyst expects the industry coverage universe corresponding industry over the next 12 months. to be attractive relative to the relevant broad market benchmark over the next 12 months. Neutral: The stock's total return is expected to be in line with that of the corresponding industry over the next 12 months. Market perform: The analyst expects the industry coverage universe to be in line with the relevant broad market Sell: The stock's total return is expected to be below that of the benchmark over the next 12 months. corresponding industry over the next 12 months. Underperform: The analyst expects the industry coverage Not-Rated: The analyst does not have conviction regarding the universe to be unattractive relative to the relevant broad outlook of the stock's total return relative to that of the market benchmark over the next 12 months. corresponding industry over the next 12 months. Broad market benchmark for Hong Kong is the Hang Seng Composite Index, for China A-shares is the MSCI China A Index, for US-listed Chinese companies is S&P US Listed China 50 (USD) Index.

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Analyst certification The authors of this report, hereby declare that: (i) all of the views expressed in this report accurately reflect their personal views about any and all of the subject securities or issuers; and (ii) no part of any of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report; (iii) no insider information/ non-public price-sensitive information in relation to the subject securities or issuers which may influence the recommendations were being received by the authors. The authors of this report further confirm that (i) neither they nor their respective associates (as defined in the Code of Conduct issued by the Hong Kong Securities and Futures Commission) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of the report; (ii)) neither they nor their respective associates serve as an officer of any of the Hong Kong listed companies covered in this report; and (iii) neither they nor their respective associates have any financial interests in the stock(s) covered in this report except for one coverage analyst who is holding shares of Shimao Property Holdings Limited.

Disclosure of relevant business relationships BOCOM International Securities Limited, and/or its associated companies, has investment banking relationship with Bank of Communications, Guolian Securities Co. Ltd., Luzhou Xinglu Water (Group) Co., Ltd., BOCOM International Holdings Company Limited, Sichuan Energy Investment Development Co., Ltd, Light Year Holdings Limited, Analogue Holdings Limited, Zhejiang New Century Hotel Management Co., Ltd, Tai Hing Group Holdings Limited, CSSC (Hong Kong) Shipping Company Limited, JH Educational Technology Inc, Shanghai Kindly Medical Instruments Co, Ltd, Edvantage Group Holdings Limited, China Bright Culture Group, Xinyuan Property Management Service (Cayman) Ltd, Sinic Holdings (Group) Company Limited, Jinchuan Group International Resources Co. Ltd, China Tianbao Group Development Company Limited, JiaXing Gas Group Co., Ltd, Huali University Group Limited, Alibaba Group Holding Limited, Alphamab Oncology, Poly Property Development Co Ltd, Kwung's Holdings Limited, Honliv Healthcare Management Group Company Limited, Shanghai Gench Education Group Limited, Zhongguancun Science-tech Leasing Co., Ltd, Joy Spreader Interactive Technology. Ltd, Fu Shek Financial Holdings Limited, Xingye Wulian Service Group Co Ltd, Jiu Zun Digital Interactive Entertainment Group Holdings Limited, Cirtek Holdings Limited, Kidztech Holdings Limited, Akeso, Inc., JD.com, Inc, Qingdao Holdings International Limited, Immunotech Biopharm Ltd, Ganglong China Property Group Limited, Sino-Entertainment Technology Holdings Limited, Dashan Education Holdings Limited, Adtiger Corporations Limited, and China Bohai Bank Co., Ltd. within the preceding 12 months. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Orient Securities Company Limited. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Everbright Securities Company Limited. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Guolian Securities Co., Ltd. BOCOM International Global Investment Limited currently holds more than 1% of the equity securities of Guotai Junan Securities Co., Ltd.

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